In a 2-1 split decision, a recent Court of Appeal agreed with the IRS that an FLP with holdings that consisted only of Dell corporation stock had no legitimate business purpose, but was primarily an estate planning device. The dissenting opinion disagreed stating that maintaining family control is a legitimate business purpose.
If the underlying asset had not been a highly liquid, publicly traded stock, I might agree with the dissenting opinion, but I have to ask myself how some members of the FLP would be harmed if other members simply took their proportionate share of the stock out of the FLP and sold them (or held them). How would that impact the interest (value) of the other FLP members?
To read more about this case, visit my estate planning website .
- Do I Pay Income Taxes on Living Trust Payouts? - September 28, 2022
- Litherland, Kennedy & Associates is Walking in the 2022 Walk to End Alzheimer’s. Join Us! - August 29, 2022
- Establishing Health Care Documents for Young Adults – A Mock Interview (VIDEO) - August 27, 2022
